Simon Read: Facebook and PayPal may be about to cash in as people get more fed up with high-street banks


Which? says the unfair current account market is long overdue for a shake-up. It called this week for the Competition and Markets Authority to refer current accounts to a full competition inquiry.

Explaining why, the Which? executive director, Richard Lloyd, said: "Low switching levels and a high level of complaints show the unhealthy dominance of the biggest banks is set to continue and this market is not working in the best interests of consumers.

"We estimate only 4.2 per cent of people will switch accounts this year. Unless we see an injection of much-needed competition into the market, the major high-street banks will continue to have a stranglehold."

That needs to change. But there are more positive indications that financial services will sooner or later be snatched away from the high-street banks' stranglehold.

The biggest news this week was the reports that Facebook has plans to enter the arena. The social network isn't apparently intending to take on the banks directly, but instead will provide remittances and electronic money. To put it simply, the internet giant will give its users the power to transfer cash between each other.

That sounds like quite an attractive prospect to me. The chance to click on a mate or family member on Facebook and transfer cash to them, either as a gift or because you owe it to them, could be hugely convenient.

Paypal is already a giant of payments in the internet world and appears to have partial aspirations to take on the banks. In fact it is already vested as a bank in Europe, in the tax-effective country of Luxembourg.

It's also moving fast into the world of payments on the high street, with Paypal already having signed up more than 2,000 UK shops and restaurants to accept its smartphone app as a payment method.

Moving money around is the main reason why most of us use banks in the first place, so switching loyalty to internet firms may not be too far away. That's especially likely given the continuing low levels of trust that the big banks have among consumers. Are the internet firms more likely to be trusted? Despite Facebook's many mis-steps, such as concerns about personal data mining, it is still seen as a relatively trusted company.

Paypal, too, has had criticisms, not least for its actions in locking up people's cash for months on the slightest suspicion of fraud. But it has worked to improve its terms and conditions and many millions use it every day with no complaints.

So both are likely to be well placed to seem attractive to people fed up with rip-off charges and poor service from their bank.

However, privacy issues will remain important. If Facebook is seem to be further abusing its position as the holder of billions of pieces of personal information, then it will kill its chances of becoming a trusted provider of financial services, even if it just turns out to be money transmission. For instance, recent research showed that prospective borrowers were disgusted at the news that lenders, such as Wonga, use social media as a means to make a decision on whether to lend to them.

The research for Amigo Loans showed that seven out of 10 borrowers are unhappy about the practice. More than a third said it made them angry, labelling it untrustworthy and an invasion of privacy. And in a clear warning to Facebook, almost half said they would consider deactivating their social media profiles if they discovered such a breach of privacy.That's something the big data firms and social networks must consider before driving away their users by exploiting them too much.

Twitter: @simonnread

Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
BBC broadcaster and presenter Evan Davis, who will be taking over from Jeremy Paxman on Newsnight
peopleForget Paxman - what will Evan Davis be like on Newsnight?
Life and Style
fashionCustomer complained about the visibly protruding ribs
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
Dejan Lovren celebrates scoring for Southampton although the goal was later credited to Adam Lallana
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior Risk Manager - Banking - London - £650

    £600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

    The benefits of being in Recruitment at SThree...

    £18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

    Test Analyst - UAT - Credit Risk

    £280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

    Trainee Recruitment Consultants - Banking & Finance

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Day In a Page

    Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

    The BBC’s wolf in sheep’s clothing

    What will Evan Davis be like on Newsnight?
    Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

    Finding the names for America’s shame

    The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
    Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

    Inside a church for Born Again Christians

    As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
    Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

    Olivier Rousteing is revitalising the house of Balmain

    Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
    Cancer, cardiac arrest, HIV and homelessness - and he's only 39

    Incredible survival story of David Tovey

    Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
    Backhanders, bribery and abuses of power have soared in China as economy surges

    Bribery and abuses of power soar in China

    The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
    Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

    Highland terriers steal the show at opening ceremony

    Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
    German art world rocked as artists use renowned fat sculpture to distil schnapps

    Brewing the fat from artwork angers widow of sculptor

    Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
    BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

    BBC takes viewers back down memory lane

    The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
    Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

    Nicolas Cage shines in low-budget drama Joe

    Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
    How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

    Make your own ice lollies and frozen yoghurt

    Think outside the cool box for this summer's tempting frozen treats
    Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

    Fiesta is UK's most popular car of all-time

    Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
    10 best reed diffusers

    Heaven scent: 10 best reed diffusers

    Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
    Commonwealth Games 2014: Female boxers set to compete for first time

    Female boxers set to compete at Commonwealth Games for first time

    There’s no favourites and with no headguards anything could happen
    Five things we’ve learned so far about Manchester United under Louis van Gaal

    Five things we’ve learned so far about United under Van Gaal

    It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little